Rental Tied To Euro - Not Good?

Discussion in 'Romania property' started by rorenter, Feb 4, 2008.

  1. rorenter

    rorenter New Member

    I moved to Bucharest March last year and signed a rental agreement, paying 500 euros a month, at the time and considering I just moved here having never been here before, didn't realise how silly that was. I earn a wage in sterling, and rental and indeed property it would seem is all in euros, despite the country having their own currency, LEI.

    500 euros remains 500 euros but a year later in sterling value, rent has gone up £36 a month although I don't tell the landlord that and pay a figure somewhere in between as I still pay in LEI. The LEI to sterling has only increased £6 a month.

    Does anyone know why they tie their market to the euro, it seems silly if they themselves get paid in lei but I know some get paid in euro now, if they get paid in lei, then they too, pay more for rent in euros. My query is this, will it stabilise, can further increases in euro to lei ruin their economy or just remain bouyant, as a renter I'm a little concerned, the only alternative is to charge euros as landlord to uk tennant but that probably won't work... that way I'd benefit from euro being strong against sterling.

    February 2008 and March 2007 underneath

    500.00 EUR = 376.425 GBP
    1 EUR = 0.752849 GBP 1 GBP = 1.32829 EUR

    0.68 (£340) / 1.47

    500.00 EUR = 1,835.51 RON
    1 EUR = 3.67102 RON 1 RON = 0.272403 EUR

    3.36 (1680) / 0.29

    340.00 GBP = 1,658.75 RON
    1 GBP = 4.87868 RON 1 RON = 0.204974 GBP

    4.95 (1683) / 0.20

    340.00 GBP = 451.729 EUR
    1 GBP = 1.32861 EUR 1 EUR = 0.752664 GBP

    0.68 (499.80) / 1.47

    Seeing how much I pay on rent and having the house in the UK, I am now considering buying an house here, one question would be, should I open a euro account or lei account or both considering my income is in sterling and if I wish to obtain a line of credit or mortgage, a bank account now might be a good idea.

    What are people's views on the above and how do you view the euro property market in Romania when positioned against LEI, are the increases viable and is it just me as an Englishman being paid in sterling seeing my rent increase £36 a month year on year. As you can tell, it's confusing me. They say the property prices in Bucharest are exagerated and inflated but then they say the same of the UK also and look how many years growth lasted there.
     
  2. markf

    markf New Member

    Unfortunately the Romanian property market is the ONLY market in Europe without any regulations. There are no official statistics and no official market indices. Nobody really knows how much is paid, where and when. And, most important, why. Anyone can be a real estate agent, no qualification is needed and anyone can setup a real estate agency. It costs 300 euros, lawyer's fee included.

    Market is tied to euro since 2003-2004. It was tied to UD dollar before, but when Dollar began to shrink, locals decided to price their properties in Euro. Banks also decided to lend euros instead of US dollars or lei.

    The bank assesor is also a very vague notion. In fact assesors are granting as much money as needed and of, course, supported by the buyer. They (assesors) have no qualification and in fact the crisis in human resources is so deep in Romania (because of the 3 millions-and-still-counting working abroad), that banks are hiring anyone. Even a homeless could take a bath and become bank assesor.

    Two big scandals are shaking right now the Romanian branch of B R D Societe Gen. (you know... the guys with 5 billion loses): 1. a young agency director (27 years) who robbed his agency (he took 100.000+ euros during the Christmas and played everything in casinos) then commited suicide (unfortunately for him, although he jumped from the 8th floor, it wasn't sufficient); 2. few days ago a woman from an agency in Craiova (South Eastern Romania) simply... transferred 2 million Euros in the bank deposit of a known gangster. Then this one simply went to the bank and picked up some 40.000 euros. Unfortunately for them, police caught the men after 2 hours. Woman is arrested.

    Anyway, regarding your question, maybe you already know that loan industry is freezing in Romania since the euro has attained 3.62 euros in November. And still falling, despite the desperate measures of the National Bank that decided to increase the interest rate to 8% (mid. January) than 9% (last Monday). So the signs aren't very positive for an investment now.
     
  3. Ricky_Ireland

    Ricky_Ireland New Member

    Does anyone know how much the current loan rates are for non-resident investors in Romania? Is there a cheaper way to get a loan through a European central ban? Thanks Richard
     
  4. David howe

    David howe New Member

    Dear Ricky

    6.2% first year rising to 9.2% thereafter due to recent increases in rates to curb inflation. you can borrow in Swiss Francs, but I would be apposed to this as the Swiss Franc has been strong for years unless your rent is also coming in in swiss Francs also. Currency trading is best left to the experts
     
  5. urban_dusan

    urban_dusan New Member

    Hi,

    I'm from Romania and I can say that every business which implicates a larger amount of money is done in euro (I mean real estate tranzactions, car buying etc). I think this is because the romanians don't trust their local currence as there was hyperinflation after the revolution. That's my explication to it...
     
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